Disney beat first-quarter earnings estimates earlier this week in large part due to growth at ESPN. Now the cable sports giant is driving Mickey Mouse shares on an entirely different front – mobile.
ESPN is attempting to subsidize wireless connectivity on behalf of its legions of mobile users, thus enabling them to watch games, highlights and videos on their smartphones without limits. The company is reportedly in discussions with at least one major U.S. carrier. If the deal goes through, it would mark the first-ever limitless data plan for mobile users.
News of the potential deal initially pushed Disney stock up 1% in early trading, though it has since pulled back a bit. What’s more important is the future financial ramifications for ESPN – and by extension Disney, its majority owner – if the company can pull this off.
ESPN currently has 45 million digital users, 16 million of which access content strictly through mobile devices. The company’s mobile usage has been growing rapidly – its average users per day has more than tripled in the last three years. A one-of-a-kind limitless data plan would surely accelerate that growth.
ESPN’s groundbreaking potential deal extends what has been an impressive run for Disney stock in 2013. Shares had risen 30.5% year-to-date entering the day. They were up 3.5% already this week after the company’s earnings-per-share increased 36% from the first quarter a year ago.
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